King County v. Boeing Co., 5267-44184-I

Citation18 Wn.App. 595,570 P.2d 713
Decision Date10 October 1977
Docket NumberNo. 5267-44184-I,5267-44184-I
PartiesKING COUNTY, Appellant, v. The BOEING COMPANY, a corporation, Respondent.
CourtCourt of Appeals of Washington

Christopher T. Bayley, King County Prosecuting Atty., J. Richard Quirk, Diane E. Dray, Deputy Pros. Attys., Seattle, for appellant.

Perkins, Coie, Stone, Olsen & Williams, Deforest Perkins, Graham H. Fernald, Richard S. Twiss, Seattle, for respondent.

CALLOW, Judge.

This case involves a contract dispute between King County and the Boeing Company over the formula by which rentals are to be readjusted under a 75-year lease between the parties for 98.15 acres of property at the Boeing Field/King County International Airport. The declaratory judgment action brought by King County seeking judicial construction and interpretation of sections of the lease was dismissed on the ground that the issues were for determination by the appointed arbitrators rather than the Superior Court. The County appeals.

The lease was entered into on September 14, 1955. In addition to the 98.15 acres, Boeing was also granted the use of concrete runways and taxiways totalling 70 acres and the use of other aircraft related facilities at Boeing Field. An annual rental was agreed to by the parties and set forth in the lease. 1 The original "Yearly Amount" was $118,861 in 1955.

The lease required Boeing to permit the County to readjust the rentals for each 5-year period after June 30, 1962. 2 The rental for the second 5-year period (1962-1967) was negotiated between the parties. In 1967, King County notified Boeing of the County's intention to renegotiate the rentals paid by Boeing for the 1967-1972 period. The parties could not agree as to the proper rental to be paid by Boeing. King County sought to have the matter referred to a 3-member arbitration panel pursuant to the lease. Boeing objected to arbitration on the ground that King County had not followed the notice requirements of RCW 14.08.120(5). The County brought an action to compel arbitration, to which Boeing answered and sought declaratory relief, praying for:

A declaratory judgment determining that the annual rental under the lease for the period July 1, 1967 to June 30, 1972 is the amount in effect thereunder as of June 30, 1967 and that no rental readjustment for such period is required under the terms of such leases in law.

In Boeing Co. v. King County, 76 Wash.2d 493, at page 498, 457 P.2d 595, at page 598 (1969), the court construed the lease, stating:

The parties have both asked for a declaratory judgment as to which statute governs this particular lease: . . .

. . . It was also the trial court's view that it having been specifically stated in the lease that it was prepared pursuant to Laws of 1953, ch. 178 (RCW 14.08.120), and the lease having quoted the language of that statute in the readjustment clause, it was clearly intended to be the controlling statute. Again we agree.

Complying with the court's order to arbitrate, arbitration was conducted during the summer of 1970. During the arbitration, the parties expressed conflicting positions on the theory of valuation to be applied. King County urged that the rentals be based on the same standard as other rentals at Boeing Field, to wit, the fair market value of the property. Boeing argued that the rental should be determined as follows: (a) All non-Boeing rentals to be subtracted from all airport operating expenses, and (b) if there is a deficit between expenses and income, Boeing rentals are to equal the deficit and the County is to be kept from operating the airport at a loss. Boeing argued that the terms of the lease require the "keep whole" theory to be applied by the arbitrators in their efforts to readjust the rentals. At the conclusion of the hearing, the arbitrators entered an award encompassed in a written order. While the arbitrators noted that two principal valuation theories were presented, they did not state which theory or theories they had used or which theory governed the rental adjustments. The rental set by the arbitrators was $180,450 per year for the 1967-1972 period.

In May 1972, King County advised Boeing of its intention to readjust the rentals pursuant to Section 11 of the lease for the 1972-1977 period. Negotiations between the parties took place until it became apparent that they were unable to agree on a new rental figure. On January 31, 1975, the County notified Boeing of its intention to submit the dispute to arbitration and advised Boeing of the identity of the County's arbitrator. King County's notice of intent to arbitrate stated it was the County's intention to argue that the 1972-1977 rental should be based on the fair market value of the property. The notice also stated that in the event Boeing did not agree with this interpretation, the County would seek a declaratory judgment prior to arbitration as to which theory should be used by the arbitrators. The parties could not agree upon the interpretation of the lease rental readjustment formula, and King County then initiated the declaratory judgment action which is the subject matter of this appeal.

The King County complaint asked the Superior Court to issue a decree which would require the arbitrators:

a. To use the fair market value appraisal theory in determining the rental readjustment for the 1972-77 period.

b. To disregard the effect of any taxes levied on the leasehold interest of defendant in the property.

and which would further command and instruct the arbitrators:

c. (As to the) effective date and amount of interest, if any to be applied to the award of the arbitrators.

d. To set forth the basis for their award by entering findings and conclusions with their award.

e. (To) hold the arbitration hearing in a time, place and manner which will permit the public to attend, including a ten day notice and a location providing adequate facilities for public attendance.

On January 21, 1976, Boeing filed a motion to dismiss the County's complaint or, in the alternative, for an order staying judicial proceedings. Boeing claims that the County ignores the consideration given by the arbitrators in the prior arbitration to issues which the County now contends can only be resolved by the judicial system. Boeing asserts that in 1970 the County submitted a memorandum to the arbitrators regarding "its contention that fair market rental value is the mandatory standard for determining the appropriate rentals," and that this contention was rejected by the arbitrators. Boeing asserts that the present suit asked the Superior Court to decide the same question, i. e., whether fair market rental value is the sole appropriate valuation standard. The Superior Court granted Boeing's motion to dismiss on the grounds that the issues raised in the complaint were to be considered and determined by the arbitrators without limitation or restriction by the Superior Court.

The issue presented is whether either party to a written agreement is entitled under RCW 7.24 to a declaratory judgment interpreting the instrument prior to arbitration of a dispute arising under the agreement.

We answer the question presented in the negative.

King County states that it is entitled to a declaratory judgment under RCW 7.24, interpreting provisions of its lease with Boeing before arbitration of a dispute arising under the lease agreement may take place. The County bases this assertion on the proposition that the provision allowing for arbitration in the event of a failure to agree was not intended to include the arbitration of disputes over the theory of valuation to be used in determining the "Yearly Amount." The County likewise proposes that the provision of RCW 14.08.120(6), which states that rentals are to be "reasonable and uniform," requires the application of a single theory of valuation for all airport lease agreements.

The purpose of the Uniform Declaratory Judgment Act "is to settle and to afford relief from uncertainty and insecurity with respect to rights, status and other legal relations; and is to be liberally construed and administered." RCW 7.24.120. Diversified Indus. Dev. Corp. v. Ripley, 82 Wash.2d 811, 514 P.2d 137 (1973), commencing at page 815, 514 P.2d at page 139, said that,

before the jurisdiction of a court may be invoked under the act, there must be a justiciable controversy: (1) which is an actual, present and existing dispute, or the mature seeds of one, as distinguished from a possible, dormant, hypothetical, speculative, or moot disagreement, (2) between parties having genuine and opposing interests, (3) which involves interests that must be direct and substantial, rather than potential, theoretical, abstract or academic, and (4) a judicial determination of which will be final and conclusive.

The statutory purpose of the act and the indication that it should be liberally construed does not make the issuance of a declaratory judgment mandatory. See Bell v. Associated Independents, Inc., 143 So.2d 904, 908, 12 A.L.R.3d 847 (Fla.Dist.Ct.App.1962); Annot., 12 A.L.R.3d 854 (1967). The granting of a declaratory judgment is discretionary. Hanes Corp. v. Millard, 174 U.S.App.D.C. 253, 531 F.2d 585, 591 (1976); Brohawn v. Transamerica Ins. Co., 276 Md. 396, 347 A.2d 842, 849 (1975); Svoboda v. Hahn, 196 Neb. 21, 241 N.W.2d 499, 503 (1976); State ex rel. Lynch v. Conta, 71 Wis.2d 662, 239 N.W.2d 313, 322 (1976). Further, where a plaintiff has a "completely adequate remedy available" apart from the declaratory judgment requested, such a plaintiff "is not entitled to relief by way of a declaratory judgment." Reeder v. King County, 57 Wash.2d 563, 564, 358 P.2d 810 (1961).

Boeing asserts that RCW 7.04.010, RCW 14.08.120(5), and the arbitration clause of Section 11 of the lease, require the arbitration of any dispute arising under the contract concerning rentals. Boeing argues that the presence of this remedy obviates any need for reliance upon a...

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